NEW MEXICO ENACTS TIME-BARRED DEBT DISCLOSURES
The New Mexico Attorney General has promulgated a rule requiring debt collectors to determine whether debts being collected are time-barred. If the debt collector reasonably and in good-faith believes a debt is time-barred, the debt collector must provide certain disclosures when communicating with the debtor orally or in writing. The debt collector must provide the debtor with information on, among other things, (i) the unenforceability of the debt in a lawsuit, (ii) the debtor’s right not to pay or take certain other action and (iii) the consequences of reviving the statute of limitation by, for example, making a payment. “Debt collector” is defined by the Rule to mean any person who, in the regular course of the person’s trade or commerce, collects or attempts to collect a debt owed or alleged to be owed by any person in New Mexico. This includes the original lender, any assignee of the original owner and third party collectors who are “debt collectors” under the federal FDCPA.
The Rule provides model language that may be used to satisfy the disclosure requirements and establishes formatting requirements for written disclosures and timing requirements for oral disclosures.
A violation of the Rule constitutes a violation of the New Mexico Unfair Practices Act, which provides for injunctive relief, private actions in which an individual or a class may recover actual damages (which may be increased for willful violations), attorneys’ fees and costs and civil penalties not exceeding $5,000 per violation.
The Rule is effective December 15, 2010, but the Attorney General has announced that his office will not enforce the Rule prior to March 15, 2011.
A number of other states also regulate the collection of time-barred debt. Some of those provisions are similar to the new Rule in New Mexico in that they permit the collection of time-barred debt so long as disclosures are provided, while others generally prohibit the collection of such debts.
Please contact us if you would like a copy of the Rule or assistance with your collection communications.
- Margaret Stolar and Chuck Gall